Depending on whose research you chose, M&A's have a higher than you might expect failure rate. Studies undertaken by KPMG, Bain & Company and Mckinsey highlight the 'proven' role marketing plays in M&A's delivering a positive performance outcome for stakeholders.
The findings show company's that integrate their brands 'new' value proposition into an actionable marketing plan are more likely to enjoy a successful outcome. Read more below:
83% of mergers fail - according to KPMG
Research shows mergers have a failure rate of anywhere between 50 and 85 percent. One KPMG study found that 83 percent of these deals hadn't boosted shareholder returns, while a separate study by A.T. Kearney concluded that total returns on M&A were negative.
While it’s easy to get caught up in the numbers and financials of a merger or acquisition, the truth is that there’s more to a successful M&A process than combining balance sheets.
The most successful and famous company mergers on the market today achieved their goals because they didn’t treat branding as an afterthought.
Unfortunately, a lot of brands don’t know how to go about merging companies with a focus on the brand. While they’re busy trying to fit the pieces of the new brand puzzle together, competitors can swoop in and steal market share, damage brand reputation, or even complete their own acquisitions.
Takeaway learning
Planning your branding strategy, ensures your new brand story improves connections with new and current clients.
20% M&A's re-set Value Proposition - Bain & Company insights
Capability M&A Deals are a different breed of M&A. Their value comes from bringing a new-to-the-world Value Proposition or new products for potential future growth.
In Capability Deals, the target assets are likely to be smaller and more entrepreneurial with an Agile working culture—that is, with entirely different ways of working from the acquirer. The target’s value resides in the people who carry specialised knowledge of the technology, R&D capability or customer insights—knowledge that the acquirer does not yet have.
According to Bain, the acquirer and target bring complementary capabilities to the table, and value creation lies at the intersection of these capabilities and actioning a marketing strategy to share the story. While the acquirer’s business model represents the industry business model as it stands today, the target’s capabilities provide a future-back view of what could be—and both need to work together to realize that vision.
Takeaway learning
They say a goal without a plan is just a dream. Successful M&A's emerging from a Capability Deal must proactively convert the 'deal thesis' into an action marketing plan.
Boosts M&A success rate by 200% - McKinsey findings
When you think about the key factors in acquisition success, what functions spring to mind? Probably sales, operations, HR, and finance. But marketing?
According to McKinsey, their experience alongside interviews with leading M&A executives indicate that marketing plays a vital role in integration and deal success and should not be an afterthought.
Rather, marketing should lead the organisation in developing fresh, compelling value propositions and setting the new organisation’s brand strategy. Marketers should then lead the delivery of the value proposition and its narrative to generate above-market growth, when measured by revenue synergies captured, can be multiples of 1.5 to 2.0 times.
Takeaway learning
Successful marketing and brand integration in M&A can have disproportionate impact on protecting and creating value from the entire integration.
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